With the Kenyan government under pressure to build more homes under the ‘affordable housing scheme’ project, new construction properties are popping up everywhere. Along with the increase in newly built homes entering the market, there has been an increase in the number of properties being sold off-plan. What does it mean to buy property off-plan? Is it a good idea?
What does “buying off-plan” mean?
Buying off-plan property means purchasing your new home before the construction is completed. This could indicate that the home is currently being built or that construction is about to begin.
In either case, you are putting your money down on the developer’s architectural plans rather than physically viewing the property, thus the term ‘off-plan’.
Benefits of Purchasing an Off-Plan Property
- You get the first pick.
Buying off the plan allows you to choose your apartment first. You can also choose what changes or improvements you want to make as long as they are within the budget. Because most people wait to buy fully constructed homes, purchasing one off the plan allows you to select the best location and the one that you believe is best for you.
- Timing
Because the settlement can be up to three years away, it is advantageous for you because if the market value increases, you will benefit from increased equity.
- You lock in a price.
Buying off the plan allows you to lock in the price and protects you from future market trends that may cause the rest of the houses in the area to increase in price. Even if the value of your property increases, you will not be required to pay any additional fees. You can then invest in another property to expand your property portfolio.
- Your property is new.
The house you buy off the plan has never had a previous owner. You will be the very first owner. It is new, regardless of whether you live in it or rent it out. And everyone enjoys new experiences!
Things to note while purchasing an off-plan project
- Conduct thorough research and background checks on all parties involved, including the developer, management company, and contractors. It is preferable to hire a developer who has a proven track record of successfully completing projects that were sold off plan. This is what we call due diligence.
- A search for similar neighborhood properties would also be beneficial. You should carefully examine and gather information about comparable nearby properties, such as their prices or rental amounts, as well as the possibility of future rent increases. This will help you project the amount of return you expect to receive if you sell or rent out the property in the future. Estate agents will be extremely helpful because they have access to all of this information. Do not rely on the developer for this information.
- Investing in prime real estate pays off. Location is an important factor in determining the potential of a property. A location near desirable amenities such as transportation, schools, hospitals, and shopping is more promising. It pays to buy the cheapest property in a good location rather than the most expensive property in the worst location. Furthermore, frequent visits to the site with your agent can be extremely beneficial.
- If you intend to flip the house, carefully review the contract and keep an eye out for any sales restrictions imposed by the developer. If possible, seek advice from professionals, such as real estate agents or your lawyer.
- Understanding your target market is essential whenever you buy property, especially if you intend to rent or sell it after completion. Consult with local estate agents to determine where demand is likely to come from. Details, dimensions, and specifications must be appropriate for the target market.
- Finally, understand your financial situation, borrowing capacity, and the lending policies of your bank or financial provider. If you have a good payment plan, you should avoid investing all of your money.
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